Treasury minister David Gauke should ponder why people are so keen on paying
the plumber or builder in cash

According to David Gauke, a Conservative Treasury minister, people who pay tradesmen in cash for their services are “morally wrong”. For obvious reasons there are no official statistics to draw on, but it is fair to assume that Mr Gauke’s rather sanctimonious observation would apply to a majority of people in this country.

Instead of pronouncing such sententious moral judgments, perhaps the minister should ponder why people are so keen on paying the plumber or the builder in cash. Could it have anything to do with the fact that they are fed up with the way the Exchequer digs ever deeper into their pockets while simultaneously wasting much of the proceeds through ill-targeted and unnecessary public spending? Householders should be free to pay for services rendered as they see fit. Spending cash is not yet a criminal offence and Mr Gauke has no right to suggest it is in any way improper or wrong.

His remarks are part of a wider Government campaign to stigmatise those who, in Mr Gauke’s words, “artificially and aggressively reduce their tax bill”. Yet avoiding tax in this way is perfectly legal, while tax evasion is not. Ministers are intent on blurring the distinction between the two and are, as a consequence, now actively engaged in a “crackdown” on people who are obeying the law.

They are doing so in a particularly invidious way, by threatening to “name and shame” those using loopholes in the tax system to minimise their tax liability. Yet the flimsiness of this approach was well illustrated when Mr Gauke sought to define an “aggressive” tax avoidance scheme. Apparently, it is one that is “contrived to defy the will of Parliament”. It seems people are to be harried for exploiting the weaknesses in badly drafted legislation: in other words, they will be expected to pay for the Government’s own legislative mistakes.

Tolley’s Tax Guide has doubled in size in the past decade and shows no sign of being slimmed by the Coalition, despite its avowed aim of tax simplification. This year’s Finance Bill, for example, weighs in at 670 pages and is thought to be the longest ever. Such length and complexity offer ever greater opportunities for people to find ways of reducing their tax liabilities.

As the Institute for Economic Affairs pointed out yesterday, tax avoidance occurs for two reasons: the system is too complex and tax rates are too high. It added: “If the Government wants to reduce tax avoidance it should reduce and simplify taxes.” That is where ministers should be focusing their energies, not on vilifying taxpayers for acting within the law.